As anyone involved with professional liability insurance knows, it’s a dynamic and continuously changing market that evolves through trends in the economy, social norms, and a list of other factors. This is evident in a recent global report on the professional liability market, which increases capacity and opposition through 2026.
Also known as errors and omissions (E&O), this coverage is a form of liability insurance that helps protect professional service-providing individuals and companies from taking on the full cost of defending against negligence claims made by a client as well as damages awarded in a civil lawsuit.
Here’s a better look at professional liability insurance and how the market will grow through the next six years.
How It Works & Where It’s Headed
Also known as E&O coverage, this insurance may come in many forms depending on the profession it is covering, especially in the healthcare field. These policies protect on a claims-made basis, meaning protection is useful only for claims made during a policy period.
Standard professional liability policies protect the client against losses coming from claims related to covered errors, omissions, or negligent acts that occurred in the conduct of the client’s business. Incidents occurring before the coverage was in place may not have protection, although some policies may include a retroactive date.
For clients of this product, the market will grow not only in rate increases but in claims, mainly due to COVID-19 and other healthcare-related issues. Across the board, there is accelerated capacity due to downward pressure on rates, intermediaries, and carriers that continue to come into the professional liability field as more insurers are under pressure to increase their revenue.
In the healthcare field, claims related to this coverage have been inconsistent. Although several insurance carriers have exited the healthcare professional liability market, the overall market did see some new capacity, including in the challenging long-term care portion where the pandemic continues to make a hard impact on residents and providers. Overall, carriers are being more restrictive on any inpatient healthcare facilities as well as residential facilities.
COVID-19 has also increased potential damages in the cyber landscape due to unprecedented attacks from hackers taking advantage of fragile and overhauled infrastructures. The pandemic has exacerbated this issue as cybercriminals target people’s rising anxiety and tricking them into sharing data. Additionally, remote work setups may have weaker security than corporate networks, giving way to hackers’ ample opportunity. As a result, more insurance carriers are requiring ransomware control information before getting a quote on coverage.
Overall, the professional liability market’s cyber component is showing signs of firming, even with rising capacity. Carriers that have been in the space for many years are experiencing higher claims. Clients should prepare to articulate cybersecurity controls in detail before renewal and use the value-added services that are part of cyber insurance policies to mitigate risk.
Moving forward, these two segments of professional liability insurance and others will shape capacity and increase rates. Clients must have the full coverage needed to protect against challenging issues in an evolving market and a world that is settling into a new normal due to a global pandemic.
About Genesee General
At Genesee, we strive to provide quality insurance solutions for the Commercial E & S sector, and we can help with your small, middle market and large excess and umbrella accounts. Our longstanding expertise has allowed us to successfully serve your clients for over three decades. Our specialized products include coverages for Transportation, Garage, P & C, Professional, Brokerage Property, Specialty Programs and many more. For more information about our products, we invite you to contact us today at (800) 282-8755.